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United States v. Approximately $6

United States District Court, E.D. California

November 7, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
APPROXIMATELY $6, 567, 897.50 SEIZED FROM CTBC BANK, ACCOUNT NUMBER 3800191916, et al., Defendants.

          McGREGOR W. SCOTT United States Attorney.

          ANDRE M. ESPINOZA KEVIN C. KHASIGIAN Assistant U.S. Attorney.

          UNITED STATES' REQUEST TO EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT FROM NOVEMBER 12, 2019 TO JANUARY 9, 2020

          John A. Mendez, United States District Court Judge.

         The United States submits the following Request to Extend the Deadline to file a Joint Status Report from November 12, 2019 to January 9, 2020.

         Introduction

         On March 18, 2019, the United States filed a civil forfeiture complaint in rem against more than sixty bank accounts, over $1.8 million in U.S. currency, prepaid flight hours with a private jet company, a luxury box with a professional sports team, and various items of jewelry (“defendant assets” or “In Rem Defendants”) connected to fraud and money laundering crimes in the Eastern District of California and other areas. As described below, the bank accounts are associated with DC Solar and its related investment funds, which the United States alleges are involved in, and contained proceeds of, a Ponzi scheme orchestrated through a tax equity investment fraud. All known potential claimants to the defendant assets were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the applicable statutory authority. Furthermore, public notice on the official internet government forfeiture site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. See Dkt. 4. A Declaration of Publication was filed on June 6, 2019, which set forth, among other items, that publication on the government's forfeiture website was complete on June 2, 2019. See Dkt. 9.

         This case is related to three other cases filed in the Eastern District of California: two civil cases, United States v. 725 Main Street, Martinez, California, et al., Case 2:19-CV-00247-JAM-DB and United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB; and one recently filed criminal case, United States v. Ronald Roach, et al., 2:19-cr-00182-JAM.[1]

         Good Cause

         The United States has provided notice to all potential claimants pursuant to law. The United States served copies of the complaint documents on all interested parties, including financial institutions, a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and individuals listed as signors on the seized bank accounts. The United States specifically served copies of the complaint documents on the LLCs through their registered agent for service of process, as listed on the California Secretary of State's website. Further, the government served copies of the complaint on the principals of DC Solar, Jeffrey and Paulette Carpoff. Lastly, the government has provided notice of this action to any entities or individuals that may have a security interest in the accounts, such as a certificate of deposit required as part of a larger financial loan package extended to DC Solar.

         Five parties have so far appeared in the case. First, the principals of DC Solar and the LLCs associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the eighty-seven In Rem Defendants. See Dkt. 6-7. Second, NetJets, through their wholly-owned subsidiaries, [2] filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged fraud proceeds. Dkt. 12-14. Third, East West Bank and Solar Eclipse Investment Fund XXXV, LLC filed claims to In Rem Defendant Approximately $9, 004, 531.62, which was seized from the Investment Fund's bank account during the government's law enforcement operation on December 18, 2018. Dkt. 15-16. East West Bank states that it was an investor in Solar Eclipse Investment Fund XXXV, LLC. Dkt. 15. The Solar Eclipse Fund and East West Bank filed answers.

         No other party has filed an answer in this case. However, based on the claimants' requests for additional time to review the allegations-in the civil complaint as well as the criminal information and plea agreements-and potential privilege issues and other defenses, and given the lengthy facts and complicated issues in this case, the United States has agreed to their requests for more time. The answers are currently due on December 10, 2019.

         Furthermore, several potential tax equity investor-victims and financial institutions have requested extensions of time to file claims in this case since the filing of the criminal action against defendants Ronald Roach and Joe Bayliss. For similar reasons underlying the agreement to extend the time to file an answer, the United States granted each request for an extension of time and those entities and institutions currently have until December 9, 2019 to file a claim in the case.

         To allow the above individuals, entities, and investors sufficient time to file claims and/or answers, as well as to research the issues raised by the facts alleged in the Complaint and recently filed criminal pleadings, the United States seeks to continue the deadline to file a Joint Status Report from November 12, 2019 to January 9, 2020 (or to another date the Court deems appropriate).

         Accordingly, there is good cause to extend the deadline to file a joint status report in this case from November 12, 2019 to January ...


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